Who's winning in marketing automation? Round-up for 1st half of 2014

by Dan Freeman 
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One of the most important metrics in evaluating the ultimate value of any cloud software product is its customer retention rate, a number that encapsulates the value obtained versus client expectations. Retention rate takes into account usability, support, expectations set, and impact on marketing and/or revenue goals. Companies that receive value in excess of expectations will generally renew; those that don’t will opt out.

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Though supremely valuable, customer retention is a number that marketing automation vendors are loath to release. Vendors’ sometimes publish data on the number and growth rate of their customer base but not a single one lets on to retention rate, or its inverse—churn.

Not to worry. Another class of marketing technology companies to the rescue.

Software tracking company Datanyze scans over 15 million of the world’s most-trafficked websites, hunting for Javascript embeds and web tags that indicate the presence of hosted software—in this case a marketing automation platform. Website additions/losses over time are an indication of platform success in the marketplace.

The chart below shows the total number of websites using selected marketing automation platforms as of 6/30/14. Note that websites do not equate with customers as a single customer may use marketing automation software on dozens or even hundreds of websites.

But wait.

Further analysis shows that the leader, Hubspot, offers a variety of product packages, including a Basic package that includes many inbound features as well as email marketing, but does not include the most salient marketing automation features such as lead scoring and automated workflows.

I estimate that at least 60% of Hubspot’s customers are Basic and if we reduce their numbers by 60% the chart looks like this.

Using the Datanyze data, I also looked at websites that added and dropped marketing automation software during the first six months of 2014. The chart below shows the website additions (blue), drops (orange), and net changes (grey) among six of the most active marketing automation vendors.

According to the data, Eloqua led the industry with 3,417 net additional websites using its platform.

The data also implies that churn is higher than many would believe. For the top 11 marketing automation platforms, the ratio of websites adds to drops for the first half of 2014 was 1.8, meaning that for every 9 websites that added a marketing automation platform, 5 websites dropped one.

Pardot had the highest add-to-drop ratio (4.8 versus the industry average of 1.8). Great marketing can generate a steady stream of new customers in a rapidly growing market, but only positive customer experiences will result in high retention rates.

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Note that these metrics are an indication only and not a definitive measure of software presence. A few caveats of this data are in order and can be found here.

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Marketing Growth Strategies LLC has been engaged in research, analysis, lead generation, and client implementation in the Marketing Automation sector since 2009 and has recently revised its highly successful 2014 Marketing Automation eBook.

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